WASHINGTON (AP) — A flurry of reports on Thursday showed that American consumers were growing more confident and spending more, strengthening a still-weak economy just five days before the presidential election.
Consumer confidence surged in October to its highest level in nearly five years. Americans were encouraged by recent declines in the unemployment rate. And they responded by spending more on cars and trucks, at retail businesses and on goods produced in the nation’s factories.
Still, businesses remain nervous about where the economy is headed and that could affect hiring. The October jobs report, to be released Friday, is expected to show another month of tepid job growth. Hurricane Sandy could also slow economic growth slightly in the final months of 2012.
On Thursday the stock market welcomed the signs of improved economic health. The Dow Jones industrial average closed up 136.16 points, or 1.04 percent, at 13232.62, and broader indexes also increased.
“U.S. economic data are at least all moving in the right direction,” Robert Kavcic, an economist at BMO Capital Markets, said in a note to clients.
Reports released Thursday showed:
¶ The Conference Board’s consumer confidence index rose to 72.2 last month, its highest reading since February 2008. While the index is still below the 90 reading consistent with a healthy economy, it has risen from 40.9 a year ago. That is the biggest one-year increase since 1994, Mr. Kavcic said.
¶ Sales in retail stores open at least one year rose 5 percent in October, according to a tally from 21 retail chains by the International Council of Shopping Centers. That exceeded analysts’ predictions. Some of the increase may reflect higher spending for generators, batteries, water and other supplies in preparation for Hurricane Sandy.
¶ Manufacturing expanded for the second straight month, largely because of higher consumer demand. The Institute for Supply Management, a private trade group, said its index of factory activity edged up to 51.7 in October, from 51.5 in September. A reading higher than 50 indicates expansion. Factory activity is growing again after contracting from June through August. The October reading was still slightly below the average for the last year of 52.2.
¶ Weekly unemployment applications fell 9,000 to 363,000 last week, according to the Department of Labor. That suggests hiring is unlikely to pick up much from its current pace of about 150,000 new jobs a month.
¶ A report by the payroll provider ADP showed that businesses added 158,000 jobs in the last month, up from 114,000 in the previous month. ADP updated its method for the October report. It has frequently diverged sharply from the government’s figures.
¶ Auto sales also rose in October, even though the storm caused dealers on the East Coast to lose three days of business. Toyota sales rose almost 16 percent, Chrysler’s 10 percent and General Motors was up 5 percent. Ford sales increased only slightly, 0.4 percent.
¶ Construction spending rose 0.6 percent in September, the Commerce Department said. A healthy gain in spending on home construction and renovation outpaced declines in commercial and government building.
¶ Manufacturing in China also improved in October, although the two surveys released Thursday show factory activity in the region was still struggling to grow. The reports are rare good news for the world economy, which has weakened because of Europe’s debt crisis and slower growth in emerging markets such as China, India and Brazil.
The United States economy expanded at a 2 percent annual pace in the July-September quarter, up from 1.3 percent in the second quarter.
Many economists predict slightly slower growth in the fourth quarter, partly because of disruptions from the storm. Still, the economy is not growing fast enough to bring relief to the roughly 12 million jobless Americans soon. With the unemployment rate still high, steady growth of more than 3 percent is generally needed to create enough jobs.
Article source: http://www.nytimes.com/2012/11/02/business/economy/claims-for-us-jobless-benefits-drop.html?partner=rss&emc=rss
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